Investment Newsletter - February 2016

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Investment Newsletter February 2016

Fear Factor Mike Deverell Investment Manager

The market turmoil we’ve been experiencing since last summer has recently moved into a new phase. As we’ve written previously, we believe the volatility has been caused by a few main factors all happening at the same time: •

Slowing growth in China and reduced commodity demand.

An oversupply of commodities, especially oil.

Divergent monetary policy with the US putting rates up and much of the rest of the world cutting rates. This has led to capital flows into the US from the rest of the world, pushing up the value of the dollar.

This all culminates with plunging commodity prices, notably oil. Remember that commodities are priced in dollars and so the strengthening dollar has helped push down oil prices and those of other commodities. Whilst this confluence of events is the main cause of the recent slide in stocks in our view, the longer this negativity persists the more chance there are of knock-on effects. Recently, we have seen that with the slide in bank shares.

Equilibrium Asset Management LLP (a limited liability partnership) is authorised and regulated by the Financial Conduct Authority. Equilibrium Asset Management is entered on the Financial Services Register under reference 452261. The FCA regulates advice which we provide on investment and insurance business; however it does not regulate advice which we provide purely in respect of taxation matters. Copyright Equilibrium Asset Management LLP. Not to be reproduced without permission.


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